Universal and Eminem group settle in historic digital case

It threatened to set a precedent for music labels paying top artists higher digital royalties in future - but now Universal Music and Eminem production group FBT have settled out of court.

The historic case, which dated back to 2009, saw FBT Productions LLC argue that Eminem was entitled to 50% of net receipts for digital download royalties - more than his existing deal provides.

That's presumably because FBT/Eminem's contract with the major pre-dates the iTunes boom. Therefore, there is no stipulation over whether download revenues should be paid on a record sales basis (as with CDs) or a licence basis. The latter, predictably, offers a higher percentage.

FBT, owned by brothers Jeff and Mark Bass, signed Eminem to an exclusive recording deal in 1995.

Three years later, they signed a deal with Dr. Dre's Aftermath Records, owned by Universal, ahead of the release of Eminem's debut The Slim Shady LP - on which they can claim 40% of any royalties paid to Eminem.

Although FBT's case was initially rejected by a jury in 2009, a federal appeals court in 2010 reversed the verdict - saying the group's request for a pretrial ruling that the “masters license” agreement for the recordings applied to downloads was valid.

Eminem was not a party in the case.

Now both parties have settled out of public view, with Universal lawyers telling the court “this action has been resolved to the satisfaction of all parties.”

This means that other artists with pre-download contracts will now not be able to use the FBT case as an example in any future litigation - and that Universal will not have to publicly reveal details of its artist contracts.